ASSEMBLY, No. 1371
STATE OF NEW JERSEY
Introduced Pending Technical Review by Legislative Counsel
PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION
By Assemblyman STUHLTRAGER
An Act regulating the business of pawnbrokers and revising parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as "The Pawnbroker Licensing Act of 1995."
2. As used in this act:
"Commissioner" means the Commissioner of the Department of Banking.
"Controlling interest" means ownership or control of, or interest in, 25% or more of the outstanding and issued voting stock of a pawnbroker business.
"Department" means the Department of Banking.
"Motor vehicle" includes all vehicles propelled otherwise than by muscular power, except those vehicles running only upon rails or tracks and motorized bicycles.
"Pawnbroker" means an individual, partnership, association, limited liability company, corporation, or other person which lends money on deposit or pledge of personal property, or purchases personal property on condition of selling it back at a stipulated price, or does business as a furniture storage warehouseman and loans money on goods, wares or merchandise pledged or deposited as collateral security, but does not include any person who regularly loans money or any other thing of value on stocks, bonds or other securities.
"Pledge" means an article deposited with a pawnbroker in the course of business.
"Pledgor" means a person who delivers the pledge into the possession of a pawnbroker, unless that person discloses that he is acting for another, in which event "pledgor" means the disclosed principal.
"Substantial stockholder" means a person who beneficially owns or controls more than 10% of the outstanding shares of an applicant or licensee.
3. a. No person shall engage in business as a pawnbroker unless that person has obtained a license issued by the Commissioner of Banking. The license shall not be transferable or assignable and shall be renewed biennially. The license shall run from the date of issuance until the end of the biennial period.
b. Each licensee shall pay to the department a biennial license fee of not more than $2,000 as established by the commissioner by rule for each place of business it maintains. The fee shall be due on January 1 of each alternate calendar year following the effective date of this act. When the initial license or certificate is issued in the second half of the biennial period, the fee shall be an amount equal to one-half the fee for the biennial period.
4. A person wishing to be licensed as a pawnbroker shall submit to the commissioner:
a. A completed written application on a form prescribed by the commissioner which shall contain, in addition to all other information required by the commissioner, a certificate that false statements made therein constitute cause for denial, suspension or revocation of a license;
b. An application fee as established by the commissioner by rule, not to exceed $500;
c. The cost of fingerprint and background checks as required by section 6 of this act; and
d. A certified statement on the application in which the applicant consents to allow the department to examine the records of the pawnbroking business and the bank accounts used for its pawnbroking business.
5. The commissioner shall approve an application for a license if:
a. The applicant has complied with the requirements of section 4 of this act;
b. The applicant meets the net worth requirements established by the commissioner by regulation; and
c. The commissioner finds that, based on the financial responsibility, experience, character, and general fitness of the applicant, the business will be operated honestly and fairly.
6. Each director, substantial stockholder, officer, owner, partner, manager and employee in the pawnbroker applicant's or licensee's business shall submit to being fingerprinted, if required by the commissioner, on forms supplied by the commissioner, and shall provide written consent to the performance of background checks. The commissioner is authorized to exchange fingerprint data with and receive criminal history information from the Federal Bureau of Investigation and the Division of State Police for use in performing background checks. The commissioner is authorized to conduct such additional background checks as the commissioner deems appropriate. The department is authorized to collect from the applicant or licensee any costs connected with these background investigations and fingerprinting.
7. a. Any sale or transfer of a controlling interest in a licensee's or applicant's pawnbroker business shall be approved by the commissioner prior to the transfer or sale, after the licensee or applicant has provided written notice of the proposed sale or transfer to the commissioner. The commissioner shall approve the transfer or sale unless the commissioner determines, following an opportunity for a hearing, that sufficient grounds exist to deny, revoke or suspend the license.
b. Upon approval of the transfer or sale, the licensee shall pay a transfer fee of up to $500, as established by the commissioner by regulation.
8. A licensee shall maintain a surety bond in an amount not to exceed $10,000, as may be required by the commissioner by rule, for each place of business operated as a pawnbroker. Each bond shall run to the State of New Jersey, pro rata, for the benefit of the department and for the benefit of all consumers injured by any wrongful act, omission, default, fraud or misrepresentation of the pawnbroker in the course of activity as a licensee. The bond shall not be payable for claims made by business creditors.
9. a. A licensee shall be liable for the loss of a pledge or part thereof, or for injury thereto, whether caused by fire, theft, burglary and otherwise resulting from his failure to exercise reasonable care.
b. Each pawnbroker licensed pursuant to the provisions of this act shall be required to submit to the commissioner proof of insurance as the commissioner may require by rule.
10. Notwithstanding the provisions of N.J.S. 2C:21-19 or any other law to the contrary, a pawnbroker shall not charge or receive interest on a loan in excess of 3% per month or a fraction thereof, except that he may charge $0.50 where the interest amounts to less. In no event shall any other charges be imposed, except as permitted by the commissioner.
11. a. A licensee shall be subject to investigation and examination by the department as deemed necessary by the commissioner, but in no event less often than once every 18 months.
b. The cost of any investigation and examination shall be borne by the licensee and shall be billed at the department's per diem rate for examinations conducted by the department.
12. A licensee shall:
a. Conspicuously display at each licensed place of business the original license issued by the commissioner.
b. Conspicuously display all signs and notifications which the commissioner may require.
c. Provide each customer, at the time of the transaction, with a pledge ticket or sales receipt on which shall be printed the name of the pledgor or seller, the name of the pawnbroker and the place where the pledge or sale is made, a description of the article or articles pledged or sold, the amount of the loan, the date of the transaction, the serial number of the loan, the annual rate of interest and the amount of any other charge as permitted by the commissioner pursuant to section 10 of this act. Nothing appearing on a pledge ticket or receipt shall relieve the pawnbroker of the obligation to exercise reasonable care as provided in this act in the safe-keeping of articles pledged with him.
d. Maintain adequate records of its pawnbroker business and provide reports to the commissioner as prescribed by the commissioner by regulation.
e. Supervise employees engaged in the operation of the pawnbroker business to ensure the business is conducted lawfully and pursuant to the provisions of this act and any order, rule, or regulation made or issued pursuant to this act.
f. Deliver to the chief of police of the municipality in which the licensee's business is located, a legible and correct transcript, on forms prescribed by the Superintendent of State Police pursuant to section 23 of this act and furnished by the police department, of all transactions conducted by the licensee during the preceding business day. The report shall be delivered to the chief of police no later than 11 a.m. on the next business day, with the exception of Sundays and holidays. The report shall contain a complete record of pawn, purchase, sale or redemption of articles, amount of money loaned on each article, or in the case of a purchase, the price paid for each article, a description of each article, and a description of the person making the pledge or sale, including the name and a photograph of that person. Any licensee who fails to comply with the provisions of this section shall be subject to a fine of $500 for each offense, enforceable by and payable to the municipality in which the pawnbroker business is located.
13. Upon the presentation of the ticket, and the tender of not less than five dollars as an installment on the principal together with accrued interest, the pawnbroker shall accept the same and issue a new ticket for the reduced amount.
14. If a pledge ticket is reported lost, destroyed or stolen, a licensee shall provide a replacement ticket, after viewing the filed photograph of the pledgor to ascertain that the person making the claim is the original pledgor of the item. No fee shall be charged to the pledgor for the replacement ticket.
15. No person or licensee shall advertise, print, display, publish, distribute, telecast or broadcast, or cause or permit to be advertised, printed, displayed, published, distributed, televised or broadcast, in any manner, any statement or representation concerning the conduct of the licensee's pawnbroker business which is inaccurate, untrue, misleading or deceptive, or which negatively affects the public's confidence in that business enterprise in general.
16. a. All unredeemed pledges shall be sold at public auction, but not before the expiration of 12 months from the date of the loan unless otherwise agreed to in writing between the pawnbroker and the pledgor, or authorized by the commissioner for due cause shown.
b. Upon expiration of a pledge term, a licensee shall mail a written notice to the pledgor, by certified mail, return receipt requested, to the last known address of the pledgor and at least 20 business days prior to the date of the scheduled public sale.
c. Notice shall also be published in three consecutive issues of a daily or weekly newspaper of general circulation in the city or county where the pawnbroker's business is conducted. The notice shall specify the time and place of the sale, the inclusive dates and numbers of the unredeemed loans, a descriptive list of items to be sold, and the dates and places where members of the public may inspect the items prior to the scheduled sale date.
17. The proceeds of a sale of unredeemed pledges shall be applied for the purposes and in the order here specified:
a. auctioneer's charges;
b. principal and interest of the loan; and
c. a proportionate share of the expense of publishing the specified written or printed notice sent by mail, determined by dividing the total expense of that inclusive notice by the number of loans sold.
d. The surplus, if any, shall be paid, upon proof of identification, to the pledgor or anyone else who would have been entitled to redeem the pledge if it had not been sold. Notice of such surplus, if any, shall
be mailed to the last known address of the pledgor, within 30 days after the sale.
18. If a surplus is not paid or claimed within three years from the date on which it accrued, it shall revert to the pawnbroker for his own use and benefit. Interest on unpaid surplus, at the rate of eight percent per annum, shall accrue only after the pawnbroker's refusal to pay the same, upon lawful demand therefor.
19. If more than one person shall claim the right to redeem a pledge, the pawnbroker shall incur no liability for refusing to deliver the pledge until the respective rights of the claimants shall have been adjudicated. If an action is brought against the pawnbroker for recovery of the pledge, he may, as a defense, require all known claimants to interplead. If no action is brought against the pawnbroker by either party within the period for which he is required to hold the pledge under this act, or within 30 days of notice of an adverse claim, he may proceed to sell the pledge and hold the surplus if any, subject to adjudication or other adjustment of the parties' rights.
20. A pawnbroker shall not:
a. Accept a pledge or purchase of goods from any person who is under the age of 18 years;
b. Transact any business between the hours of six o'clock in the evening and eight o'clock in the morning, but on any day preceding a legal holiday, he may transact business until the hour of ten o'clock P.M.
c. Accept a pledge or pawn of a motor vehicle; or
d. Accept a pledge or pawn of any mechanic's tools without clear proof of ownership as set forth in section 21 of this act.
21. No pawnbroker, his agent or attorney, shall receive by way of pledge, pawn or purchase, from any person any mechanic's tools used in the erection, addition or alteration of any building or structure, unless that person produces before the pawnbroker, his agent or attorney, two reputable citizens who reside in the county in which the pawnbroker is doing business and who shall respectively subscribe to an affidavit containing the name, residence and occupation of the affiant, and setting forth that the affiant believes that the person desiring to pledge the mechanic's tools is the true owner thereof. Every such affidavit shall be maintained on file by the pawnbroker for five years.
22. a. The commissioner may, by written directive and after the licensee has had an opportunity for a hearing pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), suspend or revoke a licensee's license to engage in the pawnbroker business if it is determined that the licensee has failed to comply with any lawful directive of the commissioner, has violated any section of this act or has otherwise demonstrated unworthiness to continue the business of a pawnbroker.
b. Any person or licensee who engages in any conduct or practice prohibited by this act shall be liable to a penalty not exceeding $7,500, to be recovered in a summary proceeding under "the penalty enforcement law," N.J.S.2A:58-1 et seq. Each violation shall constitute a separate offense and the penalty in this section shall be in addition to any suspension or revocation of license. In addition, willful violations of this act shall be considered a crime of the fourth degree.
23. a. The Superintendent of State Police, in consultation with the Commissioner of Banking, shall establish and maintain a central registry of transactions of pawnbrokers from the reports submitted to municipal police chiefs pursuant to subsection f. of subsection 12 of this act in the form of an electronic data base. The information maintained shall include, but not be limited to:
(1) the name and each licensed place of business of a pawnbroker;
(2) items pawned, purchased, sold or redeemed by each pawnbroker at each licensed place of business.
b. The Superintendent of State Police shall make available to all local, state and national law enforcement agencies, electronically or otherwise, the data and information maintained in the central registry for the purpose of assisting those agencies in locating lost or stolen property and in the apprehension, arrest and conviction of persons accused of stealing or trafficking in stolen goods.
c. The Superintendent of State Police, in consultation with the Commissioner of Banking, shall by regulation prescribe the form for daily reports by pawnbrokers required by subsection f. of section 12 of this act in such a way that the information is easily transferable to the electronic data base required by subsection a. of this section. In addition, the Superintendent in consultation with the Commissioner of Banking, shall promulgate rules as necessary to effectuate the provisions of this act pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
24. The commissioner shall promulgate rules as necessary to effectuate the provisions of this act pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
25. R.S.45:22-1 through 45:22-34 are repealed and P.L.1939, c.55 (C.45:22-35 through 45:22-40) is repealed.
26. This act shall take effect on the 180th day following enactment, except that subsection c. of section 23 and section 24 shall take effect immediately so that the Commissioner of Banking and the Superintendent of State Police may promulgate rules to implement the provisions of this act.
STATEMENT
This bill revises the law regulating the business of pawnbrokers by the Department of Banking and establishes a central registry in the Division of State Police of the items pawned or purchased by pawnbrokers to aid in the location of lost or stolen goods.
The bill provides for biennial licensing by the department and authorizes the commissioner to set administrative fees by regulation. It requires fingerprinting of all officers, directors and substantial stockholders of pawnbrokers, as defined by the bill, and requires written consent for background checks. Transfers of a controlling interest in a pawnbroker's business would have to be approved by the commissioner. The bill also establishes guidelines for the operation of a pawnbroker's business, including protections for those pledging items for pawn.
Pawnbrokers are required by the bill to keep records of their transactions and file a report thereof daily with the local police chief. In turn, the Superintendent of State Police, in consultation with the Commissioner of Banking, is required to establish a central registry from the reports submitted to the municipal police chiefs. Information in the central registry would be made available to law enforcement agencies nationwide to aid in the location and return of lost or stolen property.
Finally, the bill repeals the existing laws which regulate pawnbrokers and their businesses.
Revises the regulation of pawnbrokers.